New US bill would allow Iran energy divestments

Washington, May 17: US lawmakers today introduced new legislation that would protect fund managers and state pension programmes from shareholder lawsuits if they divest stakes in energy companies that do business with Iran.

Rather than taking punitive action, the new legislation would authorise state and local governments and private fund-managers to divest assets for companies that invest over 20 million dollars in Iran's energy sector, which the US government would publish in a list every six months.

The Iran Sanctions Enabling Act of 2007 was introduced in the Senate by Illinois Democrat Barack Obama and in the House of Representatives by Democratic Reps. Barney Frank and Tom Lantos, who chair the Financial Services and Foreign Affairs committees, respectively.

Iran is embroiled in a diplomatic stand-off with the West over its nuclear program, which it claims is for civilian electricity but the United States and other nations worry could be meant for atomic bomb-making.

Fund managers that choose to divest could do so ''without breaching their fiduciary responsibilities to their investors,'' and thus dodge class-action lawsuits from disapproving investors, Frank said.

''Federal law should not stand in the way of investors or state and local governments who want to act on their own conviction about morality and American interests,'' Frank said.

The Iran-Libya Sanctions Act requires the government to consider sanctions on foreign companies that invest more than 20 million dollars a year in Iran's energy sector.

However, no companies have actually been sanctioned by the law, which took effect in 1995, according to US congressional researchers.

The legislation, which could be debated by the House this summer, could have major implications for pension funds like the California Public Employees' Retirement System or Calpers, which manages the world's biggest pension fund with 225 billion dollars.

Several years ago New York City's public pension systems began nudging US firms with foreign subsidiaries, like Halliburton to exit Iran. Since then, at least eight states -- including Florida with its 40 billion dollars pension fund - have introduced divestment legislation.

A report by the Library of Congress' Congressional Research Service found more than 100 billion dollars in energy investments in Iran since 1999 by such foreign firms as France's Total, Royal Dutch Shell, Italy's ENI and Inpex of Japan.

Reuters>